2024 universal registration document

L'Oréal's activities may contribute to climate change throughout its value chain, including greenhouse gas emissions from the supply of raw materials, the transportation of goods and manufacturing processes. These emissions contribute to climate change and can indirectly affect populations through phenomena such as extreme weather events, water shortages, food insecurity, greater prevalence of health problems and climate-induced migration.

Climate change adaptation

Climate change mitigation

Energy

Climate transition plan

Pulling the decarbonisation levers on Scopes 1, 2 & 3

L'Oréal's leadership in the field of sustainable development can be the catalyst for wider change in the industry. By developing and adopting more sustainable products, L'Oréal can encourage more environmentally friendly production practices industry wide, including among suppliers. In the face of climate change, this approach can be used to empower consumers to make more informed, sustainable choices.

In terms of transition risks, a sudden increase in the price of carbon imposed by suppliers represents a financial risk as it would mechanically lead to an increase in operating costs. The transition towards sustainable packaging is intensifying competition for innovative materials. The cost and availability of such materials are becoming more uncertain, and this could impact L'Oréal by increasing its production costs. At the same time, growing demand for sustainable products poses a market risk, as failing to act swiftly could give rise to the loss of market share to more environmentally advanced competitors.

Climate change also exposes L'Oréal to direct physical risks. The increasing scarcity of water and rising temperatures could impact demand for certain products, forcing the Group to adapt in order to remain competitive. At the same time, the growing frequency of extreme weather events is threatening the supply of agricultural raw materials, with the attendant risk of price volatility and supply chain bottlenecks. These events could also disrupt external energy supplies, underlining the importance of energy efficiency for L'Oréal.

The main environmental impacts of the cosmetics sector are connected to the use of products that require rinsing water, mainly affecting the carbon footprint and the water footprint. In the context of increasing water stress, changes in consumer behaviour represent an opportunity to develop innovative, water-saving products that meet new consumer expectations.

The transition towards renewable energy also represents an economic opportunity for L'Oréal. The expected rise in the price of fossil fuels is accelerating the switch to renewable energy. This could allow L'Oréal, which is already at an advanced stage in this process, to reduce its operating costs relative to competitors who have made less progress.

Growing consumer awareness of the environmental impact of products, reinforced by regulatory change and environmental labelling, may provide L'Oréal, as a pioneer in these matters, with the opportunity to promote its commitment and innovation in the field of sustainable development.